Invoice discounting

Invoice discounting is a means of raising money using invoiced debtors as security, It differs factoring in that the borrower retains control of dealing with customers and collecting payments.

This leads directly to one advantage of invoice discounting over factoring: it is possible to keep the use of invoice discounting confidential (conceal it from customers.

Because of this, lenders offering invoice discounting will want to satisfy themselves that the borrower is able to handle the process adequately, with sufficiently good staff and processes.

Confidential invoice discounting is likely to means till more stringent requirements.

As with factoring, non-recourse facilities may be available at greater cost.

Managing the cash flows from invoice discounting is also more difficult because of the need to pay the amount collected on each invoice to the invoice discounter.

In other respects, invoice discounting is similar to factoring, see our more detailed page on factoring.

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